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Discos Need $10bn Investment to Boost Power Distribution –AFD

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  • Discos Need $10bn Investment to Boost Power Distribution –AFD

The 11 power distribution companies operating in Nigeria need $10bn worth of investments to efficiently distribute electricity across the country over a five-year period, the French Agency for Development has said.

AFD disclosed this in a report it presented to operators in the power sector in Abuja on Monday, adding that the $10bn investment would involve new investors and would deliver quality electricity services over the projected period.

Findings and recommendations contained in the report were presented at a conference organised by AFD on Nigeria’s power sector challenges, as the agency stated that it carried out the in-depth study with the support of the European Union in order to contribute and design a way forward for the industry.

“According to the best estimates, the 11 Discos operating in Nigeria would need more than $10bn in five years. Also, innovative financing solutions must be devised, possibly involving new players,” the study, which was done by a consultancy firm, AF Mercados, under the AFD’s Technical Assistance Programme, stated.

In a presentation that was made at the conference, the Team Leader of Capacity Building and Technical Assistance Programme, AF Mercados, Jose Guerra, said the aim of the study was to help empower decision-makers in making the right decisions in Nigeria’s power sector.

The French agency noted that the AFD along with other development institutions involved in supporting the power sector in Nigeria had been witnessing the stall of investments in the sector since it was privatised.

It stated that this had led to the build-up of a major bottleneck, constraining access to electricity for the public and the economy, driving up the cost for users who now resort to diesel-powered generation.

It said the failed attempts at financing Discos led the Federal Government and its development partners to think out ways of breaking the vicious cycle that started from an initial infrastructure gap and led to today’s severe liquidity crisis with a revenue shortfall that is over $3bn.

The AFD report traced causes of the shortfall in the sector to the lack of a cost reflective tariff, customer dissatisfaction and lack of performance in the power sector in general, as these had led to a shutdown of access to finance.

In conducting the study, AFD said Mercados worked closely with stakeholders in the sector including the Discos since mid-2017, following the guidelines of the Performance Improvement Plans released by the Nigerian Electricity Regulatory Commission.

The study also highlighted key actions to be taken to solve the liquidity crisis in the sector such as segmenting the electricity market into manageable urban areas, rural areas, and potential eligible customers.

The other segmentations were informal settlements in urban areas and peri-urban areas, and the difficult to manage rural areas.

The report further talked about analysing the cost and revenue structure of the Discos on the various segments, as well as appropriate data that would help in valuing the needed investment linked to key performance targets to help in forming the PIP of each Disco as required by NERC.

The development partner, however, emphasised that there was a need to set up consistent legal and regulatory frameworks that would attract investors to sustain the power sector.

The study noted that there was a need for more investments rather than interventions by the Central Bank of Nigeria in the electricity market.

It noted that N600bn had been earmarked as the second tranche of the CBN’s Nigeria Electricity Market Stabilisation Fund starting this year or by 2020.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

Nigeria’s Real Estate Sector Shrinks by 8.06% in the Third Quarter -NBS

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Economic uncertainty plunged Nigeria’s real estate sector by 8.06 percent in the third quarter of the year, according to the National Bureau of Statistics (NBS).

Nigeria’s statistics office said “In nominal terms, real estate services recorded a growth rate of –8.06 per cent in the third quarter of 2020, indicating a decline of –11.78 per cent points compared to the growth rate at the same period in 2019, and by 9.12 per cent points when compared to the preceding quarter.

“Quarter-on-quarter, the sector growth rate was 18.92 per cent.

“Real GDP growth recorded in the sector in Q3 2020 stood at -13.40 per cent, lower than the growth recorded in third quarter of 2019 by –11.09 per cent points, but higher relative to Q2 2020 by 8.59 per cent points.

“Quarter-on-quarter, the sector grew by 17.15 per cent in the third quarter of 2020.

“It contributed 5.58 per cent to real GDP in Q3, 2020, lower than the 6.21 per cent it recorded in the corresponding quarter of 2019.”

Nigeria’s economy contracted by 2.48 percent in the first nine months following a 6.10 percent and 3.62 percent contraction in the second and third quarters respectively.

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Economy

Nigeria Requires N400 Billion Annually to Maintain Federal Roads -Senator Bassey

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The Chairman of the Senate Committee on road maintenance, Senator Gersome Bassey, on Friday said Nigeria requires about N400 billion annually to maintain federal roads across the country.

The Senator, therefore, described the N38 billion budgeted for road repairs in the 2021 proposed Budget as grossly inadequate. According to him, nothing meaningful could be achieved by the Federal Roads Maintenance Agency (FERMA) with such an amount.

He said, “For the 35 kilometres federal roads in the country to be motorable at all times, the sum of N400bn is required on yearly basis for maintenance.”

Bassey “What the committee submitted to the Appropriation Committee in the 2021 fiscal year is the N38bn proposed for it by the executive which cannot cover up to one quarter of the entire length of deplorable roads in the country.

“Unfortunately, despite having the power of appropriation, we cannot as a committee jerk up the sum since we are not in a position to carry out the estimation of work to be done on each of the specific portion of the road.

“Doing that without proposals to that effect from the executive, may lead to project insertion or padding as often alleged in the media.”

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Economy

Scarcity of Day-Old-Chicks Cripple Poultry Farmers in Akwa Ibom

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Despite billions of Naira spent on Akwa Prime Hatchery and Poultry Limited by the Executive Governor of Akwa Ibom State, Udom Emmanuel, poultry farmers in the state said they had to order day-old-chicks from outside the state as the 200,000 capacity poultry farm developed specifically to make day-old-chicks and other poultry products available at affordable prices is almost empty at the moment.

The farmers expressed frustration over many challenges they face in the course of bringing day-old-chicks from outside the state. Usually, Ibadan, Enugu and sometimes as far as Kaduna, while the hatchery built and inaugurated in 2016 remains idle.

Mr Ekot Akpan, one of the poultry farmers who spoke with the pressmen said the state had not had it this bad.

Akpan said: “For the 12 years that I have been in poultry farming, this is the first time that poultry farmers have been so harshly affected by both economic and non-economic factors. And, quite unfortunately, nobody is available to offer any explanation.

“Farmers have been left at the whims and caprice of owners of the means of production.

“There seems to be no government regulation of the poultry industry. How, do you explain a situation where you wake up suddenly and the price of a day old chick is selling for N600, a bag of feed goes as high as N6,000.

“And, in a state that government claims to be pursuing agriculture as one of his cardinal programmes.

“For instance, in 2016, the state government said it has constructed an hatchery, and the intention according the government was to ensure availability of day old chicks at affordable price to farmers, but, quite, unfortunately, that effort has not yielded any tangible result.

“Farmers are still getting their day old chicks from Ibadan, Kaduna, and Enugu. So, the question now is where is the hatchery?

“One would have expected that farmers would be buying old chicks at humane prices, but, from all indications they acclaimed hatchery is a ruse. So, which one is the Akwa Prime Hatchery producing,” he said.

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